Jennifer is a licensed salesperson in New Hampshire representing the buyer in a transaction. The purchase and sales agreement is fully executed. The seller's agent calls Jennifer and asks her to hold the buyer's $10,000 earnest money deposit in her personal checking account until closing because it is more convenient. Under RSA 331-A, how should Jennifer handle this request?
Correct Answer
D) Jennifer must decline and inform the seller's agent that all earnest money must be deposited into a properly maintained trust account.
Under RSA 331-A, all funds received by a licensee in connection with a real estate transaction — including earnest money deposits — must be deposited into a properly maintained trust (escrow) account, not a personal checking account. Commingling client funds with personal funds is a serious violation of NH license law and grounds for disciplinary action, regardless of whether records are kept or consent is given.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
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